Government Strategy for Growing Economy and Good Jobs without Over-reliance on Foreign Manpower

7 Mr Liang Eng Hwa asked the Minister for Trade and Industry what is the strategy for growing our economy and creating good jobs for Singaporeans without an over-reliance on foreign manpower.

The Minister for Trade and Industry (Mr Chan Chun Sing): Mr Deputy Speaker, Sir, we strive for economic growth to achieve three objectives: to give our people better jobs and better lives; to provide our people the opportunities to fulfil their potential and aspirations; and third, to grow Singapore's economic strength for strategic relevance in the world.

Our economic strategies are developed to improve the quality of life and livelihoods for Singaporeans. Quality jobs provide good wages; and good wages and opportunities enable Singaporeans to pursue our dreams. Quality jobs come from quality investments, both local and foreign. The competition for quality investments has never been easy. Without natural resources, we strive hard to create our own competitive advantages and build up a strong reputation and trusted brand name for Singapore based on the following: political stability, rule of law, a progressive business environment, cohesive tripartite relations, skilled workers, physical and non-physical connectivity of air, land, sea, data, finance, talent, technologies and regulations, intellectual property protection and consistency of policy execution over the long term.

However, Mr Deputy Speaker, Sir, beyond all the above factors, the size and quality of our talent pool still matters. Size confers certain economies of scale. Too small a talent pool and our enterprises will find it hard to compete with the big global players; an inability to scale or transcend our geographical size and location will hinder our overall competitiveness.

The quality of our talent pool is equally important. It allows us to overcome the limitations of size to attract high-quality and high value-add investments.

Talent is an even more critical success factor for our new growth sectors, such as ICT, Finance and Advanced Manufacturing, which compete on the basis of ideas, knowledge and skills – more than just size. Talent is thus critical to ensure that we are able to win the quality investments not only for this generation but also for future generations.

On the other hand, the loss of a quality investment means more than the loss of competitiveness and good job opportunities for this generation of Singaporeans. It also means the loss of competitiveness and good job opportunities for future generations, where we run the risk that our children and grandchildren will end up having to seek better job opportunities elsewhere because these high and higher paying jobs are no longer available in Singapore.

Hence, to allow our people and enterprises to punch above our weight, we need a certain local foreign complement, both in terms of quantity and quality.

Mr Deputy Speaker, Sir, with your permission, may I illustrate with a simple model using the slide on the LED screen, how we create good jobs for Singaporeans with a foreign workforce complement, but without being overly reliant on foreign manpower.

Mr Deputy Speaker: Yes, please. [A slide was shown to hon Members. Please refer to Annex 1.]

Mr Chan Chun Sing: The red Lego bricks we see in Figure 1 represents the Singapore workforce. If we only have the Singaporean workforce, the size of our economy will only be so big and the wages of our people only so high, as shown in Figure 1. That is the baseline case.

If we bring in some foreign manpower to complement our local workforce, we can grow the overall size of the economy and, more importantly, allow our people to take on higher wage jobs that are commensurate with their education and aspirations. The foreign complement is the one in yellow. However, even at this stage, there will still be many Singaporeans with the talent and aspirations to achieve even better prospects and higher wages, either in Singapore or elsewhere in the world. To achieve that, we need higher quality investments that can create even higher paying jobs. This will often require us to bring in some foreign workers at different skills levels to complement the local workforce to win the next slate of high quality investments that can provide more high-paying jobs for Singaporeans, as shown in Figure 3. Otherwise, our globally mobile and competitive Singaporeans will leave for greener pastures elsewhere.

We may ask, "Why do we not have all the Singaporeans doing the highest paying jobs immediately?" This was where I left off in the last Parliament session where I explained the dilemma and the trade-offs, and asked if we would take a new investment that provides many good jobs for Singaporeans, but some of the higher paying jobs in the company are initially filled by foreigners, as shown in the diagram in Figure 3. At the first step, we did not have all the Singaporeans taking all the highest paying jobs.

Do we want such an investment in Singapore or should we turn it down and let the company invest in another country? If we turn it down, we immediately lose the large number of good jobs that Singaporeans can have, brought about by this investment. We also lose the opportunity for Singaporeans to take on higher level positions over time, as these jobs are no longer in Singapore.

Our strategy is to win the investment first and work hard to quickly upgrade the skills of our workers to take on those higher paying jobs as soon as possible. Our strategy is to win the investment first not just for this generation, but for the next. Work hard to quickly upgrade the skills of our workers to take on these higher paying jobs as soon as possible. Progressively, our workers will have opportunities to take on those jobs. And, certainly, the next generation who are better educated, will have better opportunities as shown in Figure 4.

Over time, more and more of the lower wage and lower productivity jobs will be moved out of Singapore. Within Singapore, these jobs will be increasingly filled by foreign workers as companies are unable to attract enough Singaporeans to take on these positions, as shown in Figure 5. In this process, we have grown the size of the economy, created better job opportunities for Singaporeans, higher paying jobs for Singaporeans, with a foreign complement appropriately sized.

This is not the end of the story. This process is repeated for every generation. Every generation, with a combination of a local and foreign workforce working together to win the next better investment for this generation and the rest. Every generation, working hard to upgrade the skills to take on the higher skilled jobs progressively, earning higher pay in the process. And throughout the process, making sure that the red bricks that represent the Singapore Core remain the foundational pillars of our workforce.

Is this story far-fetched? No. This was the story of electronics to semiconductors that I shared in Parliament in the last sitting. For example, Esther Ng and Alice Low – two ladies – went from being operators in Texas Instruments in 1969 to become a document control assistant and a technician in the yield enhancement lab of Micron respectively, earning higher wages than when they first started. They have since retired and they have both contributed to developing the industry for future generations to benefit from.

Our local businesses have also benefited from attracting high-quality investments. A local SME, CK Shipping, went from a traditional logistics player to be a specialised aerospace logistics provider for SAESL, a joint venture between Rolls Royce and SIA Engineering. CK Shipping also worked with Enterprise Singapore to reskill their workers to build capabilities in the new sector, allowing Singaporean workers to benefit from the new opportunities created. Esther, Alice and CK Shipping would not have risen in their stations had we not attracted new investments and progressively upgraded our economy.

What was true for the electronics to semiconductor story and shipping is true for all sectors. Today, we are seeing the same story unfolding before us in the data, digitalisation and ICT sectors. This is what we are doing – to grow new sectors like Advanced Manufacturing, Agri-tech and to transform our existing sectors like logistics and hospitality. Our fresh graduates from Universities and Polytechnics are progressively filling up these higher skilled, higher paying jobs. And we will step up our mid-career upgrading programmes for our middle-age workers to keep pace with these new technologies and new industries.

So, we need a balanced approach to our talent strategy. We understand. Too many foreign workers – and not necessarily just the lower skilled ones – our local workforce feels overwhelmed. Too few, our local enterprises and workers are unable to achieve scale or competitiveness for the global market. Hence, it is a strategy that requires constant fine-tuning to get the balance right for enterprises and workers.

Beyond quantity and quality, we must also diversify our foreign manpower sources and there are good reasons for this. From a business continuity perspective, we must manage the risk of overly relying on any particular source for any particular type of foreign manpower. From a social perspective, we must manage the externalities associated with too high a concentration of any particular foreign labour source.

Singapore is a diverse, cosmopolitan and inclusive society. But we must also not ignore the public discomfort that can surface with too high a concentration of any particular foreign worker group. We are keenly aware of these challenges. Again, this is a work in constant fine-tuning, based on the acceptance of foreigners by our society and the manpower needs of our companies.

We will also ensure that Singaporeans are fairly treated. We have the Fair Consideration Framework, which we tightened recently. We will not hesitate to act against companies that discriminate against Singaporeans.

To grow our economy and job opportunities, we will always need a certain local-foreign complement, both in terms of quality and quantity – to keep it to a manageable level – we must, first, continuously improve the skills and productivity of our Singaporean workers. We are doing this through our education system and continuing lifelong training system, such as SkillsFuture programmes, and we will continue to invest heavily in this area.

Second, we must manage the number and quality of the foreign complement to strike a good balance between economic needs and social acceptance.

Third, we must ensure that Singaporeans are fairly treated at work and errant companies which treat their Singaporean workers unfairly can expect to face enforcement action and penalties.

Last but not least, progressively enable more and more Singaporeans to take on the higher paying jobs from our investments. This was how we transformed from Third World to First and this was how we secured and will secure a brighter future and better lives for all Singaporeans.

Mr Deputy Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Holland-Bukit Timah): Thank you, Sir. While I agree with the Minister the need to remain open, given our circumstances, and the benefits of complementarity between the local and workforce, I would still like to ask the Minister to explain why can we not work towards zero-foreign manpower growth in Singapore?

Mr Chan Chun Sing: Mr Deputy Speaker, Sir, the question raised by Mr Liang Eng Hwa has often been raised, not infrequently. In fact, if I recall, I believe the Workers' Party also raised this possibility previously. I do not know if the Workers' Party still advocates this, but I remember hearing this as well, sometime back in Parliament. Mr Pritam can correct me if I am wrong.

Let me explain why, while this is a theoretical possibility, it is actually very hard to achieve in practice without serious implications and trade-offs for our economy. Let me use an example to illustrate the challenges and trade-offs, supposing we adopt this policy of zero-foreign manpower growth. Maybe the best way for me to do is to follow on from the example that I used at the last Parliament sitting, where I said that: supposing we have a Singaporean working in a job that pays $5,000 now. And we are able to attract an investment that comes in and creates two new jobs at $7,000 and $10,000. But bearing in mind that, essentially in Singapore, we are almost at full employment and our labour force participation rate is already one of the highest in the world. Which means that cumulatively, we have very little spare capacity.

So, now what do we do? The Singaporean is now holding the $5,000 job. We have the prospect of having two new jobs – $7,000, $10,000, with a new investment. Supposing, as a thought process, we say that we will not allow any fresh foreign worker to come in. Then, what does it mean? The only way that we can bring in that investment is: first, there must be two Singaporeans available to do those jobs. But the Singaporeans are already in jobs. So, the chances are that if we do not have circulation space for our manpower, chances are that we will forgo that investment, because we have essentially full employment, one of the world's highest labour force participation rate, but we have no spare capacity. And we cannot free up two in time to take the new investment. That is one possible scenario. So, we will lose the investment for this generation and the next.

There is another possible scenario, which is that we also keep to the zero-percent foreign workforce growth. What it means is that we give ourselves a small discount that in the short term, we allow a surge of a foreign workforce complement to come in. So, we shift the Singaporean over to the new jobs – the $7,000 and $10,000 jobs, if possible. Then, we have to ask ourselves what do we do for the two jobs that are being vacated in the $5,000 job company?

If we have zero-foreign workforce growth, that means that the company with the $5,000 job will not get a foreign substitute in place of the two Singaporeans that have left, which means that that company will likely be unsustainable, which means that the rest of the Singaporeans in that company will also likely be displaced once that company becomes not viable. So, this is the difficulty.

While it is theoretically possible, there is a third possibility, which is we will tell everyone to improve the productivity as much as they can to release the two workers. Retrain them and then we can take on the new investment and we do not need new foreign workforce. Now, that is ideal. That is ideal. But we also know that in the real world, it is not easy to do because different industries will have different opportunities for productivity growth. Manufacturing will be much higher than services, for example.

And the speed and skill at which we can retrain and upskill our workers, are dependent on many factors. Whether we can do it in time to catch the new investment, is always uncertain. So, the foreign workforce growth is one way to overcome this circulation for the companies to transit, just as the model I showed during the slideshow just now. Over time, some of the lower value-add and lower productivity jobs will have to be displaced, in order for us to take on the higher value-add, higher productivity jobs.

But it takes a process and it takes circulation space, which is why while we maintain the overall growth trajectory over a period of time, we must be careful not to crash the gears and make our enterprises suffer the consequences of the lack of capacity to circulate and regenerate capacity. We must also be cognisant of the ability and the pace which we can reskill and upgrade our workers.

So, while it is a theoretical possibility, we should not take it lightly and assume that there are no serious implications with a crashing of gears. But we are obviously cognisant that foreign workforce growth cannot grow indefinitely. Over time, there must be circulation, where the higher quality ones displace the lower quality ones, and that is how progressively generation by generation, we created space.

So, we refer back to the model that I used. If from Figure 1 to Figure 5, and the total number of Singaporeans is still the same, and everything is foreign complement, then the balance would be totally lopsided. But over time, you would notice that by the time we reach Figure 5, the bottom part is hollowed out; and that is how we maintain the overall stance.

I will conclude by sharing one other aspect with this House.

Over the next 10 years, our local labour force will peak. Labour force participation, even with the extension of the retirement age, the local labour force will peak because of our Total Fertility Rate (TFR). We have to make a difficult decision.

Supposing we go on zero-foreign workforce growth. When local labour force peaks and foreign labour force does not grow, it means that the total labour force will peak and then decline. That is a tremendous challenge for the enterprises to make the necessary adjustments. We will have to ask ourselves how do we get to that stage and emerge stronger. Everything that we do now must prepare for the day where our local labour force peaks, because the choices are stark.

If we maintain the current ratio of local-foreign, when local workforce peaks, foreign workforce must peak. When local workforce falls, foreign workforce must fall, and the total must fall. If we maintain a stable total, as local workforce peaks and falls, foreign workforce must take up the slack, which means that the ratio must change. But whether the ratio can change will depend on whether our society can accept the change.

It is not a straightforward issue and different sectors will have different ratios. That is how we must navigate this carefully in the next 10 years to make sure that we take care of the prospects for fellow Singaporeans; at the same time, make sure that our enterprises have the opportunities to generate new capacity to compete with the world.

Mr Deputy Speaker: Mr Pritam Singh.

Mr Pritam Singh (Aljunied): Thank you, Mr Deputy Speaker. Just a few points. Firstly, on the point that Minister Chan raised about the Workers' Party proposal, I believe that was in the context of the 2013 debate we had on population, the overall population policy. The position then was keeping the foreign workforce numbers constant, as the Minister shared, but if 1% resident workforce growth target was achieved – there was a caveat to that. So, that is just as a matter of clarification; notwithstanding Minister's reasoning as to how difficult that balancing act will be and the situation as the numbers peak in this decade.

There was another point that came out of that debate, if I remember, and I do apologise if I get my facts wrong here, but I do believe that the entire population policy and the way we are moving forward would be up for review at the end of the decade. Those were the terms – end of the decade. So, the debate happened in 2013. We are in 2020 now. My question really is are we going to have a debate, a Motion on this matter, on the population issue, very much because Minister raises an important point about how significant the upcoming decade will be for overall strategy.

And finally, I think this is a Point of Order more than anything. I think for Question and Answer time, the Standing Orders do say that it should not be a pretext for a debate. That is the word in the Standing Orders, but I think we probably need a longer and more extensive discussion in Parliament about this matter.

Mr Deputy Speaker: Is Mr Pritam Singh asking me for a ruling on your third question?

Mr Pritam Singh: No, Mr Deputy Speaker. It is just we have had episodes where Question and Answer time goes on to a pretty substantive issue. And I think we, perhaps, should deal with it in another way.

Mr Deputy Speaker: You are right, Mr Pritam Singh. Minister Chan.

Mr Chan Chun Sing: Okay, so I hear the clarification. So, zero foreign workforce growth, if 1% resident growth. The question that all of us in this House have to ponder very seriously for the future of our country is this: what if we do not achieve 1% resident workforce growth? And 1% resident workforce growth is very significant. Given our TFR, it is not a given that we will be anywhere near this.

On the other hand, to what extent we can bring in fresh immigrants to supplement? That is also not a given. In fact, today, if I may be frank, even if we try, whether Singapore can be the choice location for other people, is an open question. I always jokingly say immigration is the story of unrequited love. Those whom we want may not want us, and those whom we do not want, may all want to come. It is a fine management.

The Member's question on the next decade, we are seriously looking at the numbers. It is not easy because there is the other dimension, which perhaps the Member did not say in his clarification. Let us take the current moment; the current moment with the virus outbreak. There would be a significant impact on our economy. Whether we can still maintain that trajectory that we are shooting for, is not a given. We cannot assume that economic growth will keep going at the rate that we desire. We aim for the best but we may not always get it.

This is very difficult. That is why even in previous population debate, to grow very fast sometimes has its challenges, but to grow not sufficiently fast, is also a challenge. If we do not grow sufficiently fast, the opportunities are not there for our next generation, it is a challenge. If we do not grow sufficiently fast and people bypass us and we lose our strategic relevance, it is also a challenge.

All these issues, we will be happy to discuss more in depth with Members because I think as leaders in our various capacities, we need to understand and have a shared understanding of these challenges so that we can collectively carry the ground for the difficult decisions that we all have to take together for the next decade.

Mr Deputy Speaker: Senior Minister of State Chee Hong Tat.

The Senior Minister of State for Trade and Industry (Mr Chee Hong Tat): Thank you, Mr Deputy Speaker, for allowing me to join this discussion.

Mr Deputy Speaker: Sorry, Senior Minister of State. This is Parliamentary Question (PQ) time.

Mr Chee Hong Tat: I would like to seek a clarification, Sir, from Mr Pritam Singh. May I have your permission to proceed, Sir?

Mr Deputy Speaker: Yes.

Mr Chee Hong Tat: Thank you, Sir. Sir, I would like to ask Mr Singh, he mentioned that the last time the Workers' Party discussed this issue was in 2013. But can I ask him to recall and to confirm if this was also raised in the GE 2015 Workers' Party's manifesto? The same proposal about curbing and having zero-foreign workforce growth. Is that a proposal that is also in the GE 2015 Workers' Party's manifesto?

Second, if I hear Mr Singh correctly, he said he had a caveat. If I heard him correctly, I think he is saying that he does support that we do need a local-foreign workforce complement. We need a balance. So, I just wanted to seek those two points of clarification from Mr Singh.

Mr Deputy Speaker: Mr Pritam Singh, you can answer but I would take the point that you made earlier that Questions for Oral Answers are meant for backbenchers to ask the front bench questions about Government policies. So, perhaps, you may want to keep your answer to the point.

Mr Pritam Singh: Deputy Speaker, you have put me in a bit of a bind here. The first reply, I do not have that information offhand, I will have to check the facts. I believe Senior Minister of State is not one just to speak without having the facts at the back of his hand, so he must have the manifesto in front of him. If it is there, it is there.

The second question was about supporting the balance. This is something we have to look at very carefully. All the time we ask for data, it is not data for the sake of data. I think it is to understand the Government's perspective because it is not a case of throwing whatever the Government is saying out of the window or turning up our noses at it.

But, certainly, we have to look at it very carefully. If the Government makes a compelling case, then there is no reason for us to be objectionable about it. But it is, certainly, something we have to look at. And that is why my initial question was about when are we reviewing the overall population plan, which was discussed in 2013 that the timeline is at the end of the decade – when we will review where we are going and what the future is going to look like. So, we will be in a better position to answer your questions and provide another perspective to the Government's plans at that point.

Mr Deputy Speaker: All right, we will move on from here.